A latest report projects that there will an addition of 791 MW of data centre capacity in India by 2026. This growth will drive a demand for 10 million square feet of real estate space, attracting investments worth USD 5.7 billion.
A key driver behind this growth is the increasing adoption of Artificial Intelligence (AI), which is expected to boost the demand for data centres in the country. As AI technology continues to advance, the need for enhanced computing power and new applications is anticipated to sustain a strong demand for the DC industry over the medium term.
Cloud Service Providers (CSPs), which offer essential IT infrastructure systems for data storage and computing power accessible through the Internet, have realigned their requirements to meet the growing AI-led demand. These providers have also announced higher investments to scale up in response to AI-driven growth.
The second half of 2023 witnessed a notable increase in data centre absorption, with a 12 per cent rise to 81 MW compared to 72 MW during the same period last year. This growth is due to CSPs regaining momentum after a brief hiatus in the first half of 2023.
“The exponential growth in processing power and data volumes, driven by AI, necessitates the development of new data centres capable of meeting energy, processing, and cooling needs. The anticipated expansion and progression of diverse AI disciplines are projected to create additional demand for data centres, expanding their capacity requirements and advancing their capabilities,” said Rachit Mohan, APAC Lead – Data Centre Leasing and Head - Data Centre Advisory, India, JLL.
In Mumbai, absorption nearly doubled as CSPs renewed their pace, utilising the available supply from the first half of the year to meet the rising demand. Consequently, there was a lower supply addition of 75 MW during H2 2023, leading to tighter vacancy levels of 5.5 per cent.
With a large user base, a talented workforce, and a thriving startup ecosystem, India is expected to emerge as a significant global data hub, noted the JLL report. Reflecting the broader digital usage trends, the country’s data centre sector has grown from 350 MW in 2019 to 854 MW in 2023.
